Minority Workers Could Use Investment Boost

This year the annual Black Investor Survey conducted by Ariel Investments and Charles Schwab didn't get much attention.

When the market is at historic lows, it's hard to get publicity for wagging your finger at African Americans for not investing in their employee retirement plans.

It was a challenge to get blacks to invest before the market went crazy, and it's probably harder now with just about everybody and their mama -- black and white -- seeing substantial losses.

Over the past 11 years, black stock ownership has fluctuated from a low of 57 percent last year to a high of 74 percent in 2002, according to the survey.

Over the same period, white stock ownership has consistently hovered around 80 percent.

But there's a good note in the investor survey.

About 90 percent of blacks and whites who are working have access to a defined-contribution plan such as a 401(k). Of those with such a plan, about 90 percent of both groups contribute regularly.

So blacks have listened. They are participating. The next challenge is to get them to put in more money.

Although African Americans are enrolled in employer-sponsored defined-contribution plans at about the same rate as whites, they save far less each month and have a considerably smaller portfolio balance. The median monthly amount that blacks contribute to their 401(k) plan is $169, while whites contribute about 50 percent more, or $249 each month. As a result, the median total household savings for retirement reported by black respondents is $53,000, compared to $114,000 for whites.

Overall, there's been an increase in all workers contributing to workplace retirement plans. The percentage participating in an employment-based retirement plan increased to 41.5 percent in 2007, up from 39.7 percent a year earlier, according to a study released by the nonpartisan Employee Benefit Research Institute. The year-to-year jump was the biggest gain in participation since 1998.

Still, the racial differences are bothersome.

In the institute's report, Hispanic wage and salary workers were significantly less likely than white or black workers to participate in a retirement plan. Like the Ariel and Schwab report, the institute's report found the gap between the percentages of black and white plan participants narrows when people of the same earning levels are compared.